The Republican cure for poverty. Punish the poor for being poor.

Bottom line: The Republican solution to all problems is the stick. The carrot is reserved for the rich.

The poor are to be punished because they are “lazy,” “socialist,” and takers who need to be whipped like oxen to get them to work.

That is the bigoted nonsense continually pedaled by the GOP.

Excerpts from the following article demonstrate the right-wing bent.

Mississippi will send back fed’s rental aid, even as housing needs remain high, Aug. 13, 2022, By By Phil McCausland

In mere days, Mississippi will end its participation in the federal pandemic rental assistance program that has kept people facing eviction in their homes during the past two years of economic turbulence.

The state still has $130 million in federal cash to run the program, but Gov. Tate Reeves, a Republican, said early this month that next Monday would be the last day to apply for assistance.

Once Mississippi finishes processing the remaining claims, they will be returning the leftover money to the U.S. Treasury, which maintains oversight of the spending.

The program’s end comes as rental prices in Mississippi have skyrocketed and a large percentage of those behind on their rent or mortgage said they are at risk of losing their home in the next two months, according to U.S. Census data.

If all these Mississippi men, women, and children become homeless, what will the GOP solution be? Just let them die out there?

The Rental Assistance for Mississippians Program, or RAMP, offered up to 15 months of rental and utility bill assistance for those in need.

It was funded by two Covid-19 economic bills passed by Congress in 2020 and 2021, which provided billions of dollars of rental relief to states to administer to people economically disadvantaged by the pandemic.

This is a net financial benefit to the states.

It adds money that passes through the hands of the populace into the hands of Mississippi’s businesses.

Those businesses can use the money to hire Mississippians.

But, for the GOP, any poor person receiving federal help is a “socialist.” (Rich people who receive federal benefits by taking advantage of tax breaks are just fine.)

Though unemployment continues to decline in Mississippi and the majority of participants in the program are employed, Reeves said RAMP disincentivized work.

In Reeve’s right-wing opinion, poor blacks are not like you and me. They would rather live on the meager scraps life serves them than work to improve their lives.

“This program has essentially become: If for whatever reason you can’t pay your rent or utility bill, taxpayers will pay them for you,” Reeves said in a statement earlier this month. “Mississippi will continue to say no to these types of liberal handouts that encourage people to stay out of the workforce. Instead, we’re going to say yes to conservative principles and policies that result in more people working.”

Classic bigoted misinformation. Mississippi taxpayers don’t pay for the program. The federal government does. And federal taxpayers don’t pay, either. Federal taxes do not fund federal spending. Even if all federal tax collections ended, the federal government could continue spending, forever.

Reeves’s decision is pure GOP meanness, a holdover from Mississippi’s days of whipping slaves to make them work harder.

Reeves’ decision hits Mississippi as the country experiences rising housing costs and fewer economic protections. Nationwide, median listing prices for houses were up 16.6% in July from the previous year, and rent grew by 14.1% in June 2020 over June 2021, according to Realtor.com reports.

Jacob Leibenluft, the U.S. Treasury’s chief recovery officer, said programs such as RAMP, which fall under the federal Emergency Rental Assistance Program, have helped to keep evictions below historical averages.

The program is a perfect example of how the carrot works better than the stick, not only from a moral standpoint but also from an economic standpoint.

He said the Treasury Department has continued to strongly urge states to use the funding to serve tenants and noted that more than 6.5 million payments have been made to renters facing eviction as of June. Even if the money is returned by states, he said it will continue to go toward housing.

“As we have done elsewhere in cases where funds are not used by the original recipient,” Leibenluft said, “we will continue to reallocate available funds where possible with a priority on keeping funds in state where there is outstanding need.”

Under Reeves’s brand of leadership, poor, impoverished Mississippi will send their unused money to other states.

Housing rights advocates and participants in the Mississippi program said the issue in their state isn’t finding work, like Reeves said, it’s finding wages that can pay for growing living costs. RAMP has been a huge aid to fill the gap, even though it often took months to arrive.

Teresa Walker, 45, a hairdresser in Jackson, said the pandemic caused her to lose numerous customers. While business has picked up, it’s still difficult to meet her rent of $935. She’s applied for the program, as well as for jobs at Target and Walmart to help her pay the approximately $4,000 she owes her landlord.

Because the process is so slow-moving, she hasn’t heard back since applying three months ago, and her bills are stacking up.

“They don’t care. They just don’t care,” Walker said. “The amount of applications they’re getting shows there is a need, and for them to suggest people like me aren’t working? It’s a slap in the face. It’s very insulting and degrading. You’re just not being sensitive to people’s needs and understanding it.”

Sensitivity is not a GOP strongpoint. Cruelty is. 

The typical applicant in Mississippi was Black and female, Home Corps data shows. Less than a third of applicants were unemployed, but nearly 70% earned less than thearea median income where they lived.

Paheadra Robinson, who runs the Southern Rural Black Women’s Initiative in Jackson, said her group traveled across the state to operate clinics for those who needed help applying for the program.

She said they would have to bring computers and help people sign up for email accounts for the first time. More clinics were planned over the next month, but they will have to be canceled because of Reeve’s decision, she said.

“A lot of these people were able to afford where they were living prior to this explosion of rental increases, and now this spike is causing major financial issues for families,” Robinson said. “It’s just unaffordable for a lot of people, and I don’t think that was given proper consideration by the leadership of this state.”

Other states with Republican governors, such as Nebraska and Arkansas, have previously declined the federal funding that would help residents pay for housing and utilities.

This is not an aberration. Republican-run administrations have a history of not serving their states. They are the governors that have declined billions of ACA (Obamacare) dollars — dollars, that would have benefitted the entire state, not just the poor.

Govs. Pete Ricketts of Nebraska and Asa Hutchinson of Arkansas rejected hundreds of millions of dollars that would have been directed to their states, claiming they were shielding residents from socialist programs they didn’t need.

We assume the residents are grateful for being “shielded” from receiving help in paying their rent, buying food, and paying for medical services.

“We must guard against big government socialism where people are incentivized not to work but are instead encouraged to rely on government handouts well after an emergency is over,” Ricketts said in March. 

“We cannot justify asking for federal relief when Nebraska has the lowest unemployment rate in the nation and we are no longer in a state of emergency.”

But Gov. Ricketts, if Nebraska has “the lowest unemployment rate in the nation,” exactly what are you trying to get your working poor to do? Get two or three jobs? What is your solution to poverty? Just let them starve and freeze to death?

Or is your goal to force the poor to move to another state?

But nonprofits in those states have told a different story since the governors rejected the federal aid in the spring.

Together Omaha, which operated the rental assistance application process for the state, has had to scramble to provide rental assistance since then, said CEO Mike Hornacek.

“Across the board, we’re all experiencing the perfect storm that we were all worried about in the nonprofit sector, which is the need is continuing at the level that it did during the pandemic and the funding is going away,” he said.

“Unfortunately, in certain cases like ours in Nebraska, some of the leadership just doesn’t seem to understand that it’s not as simple as people need to get back to work.”

SUMMARY

The Republican solution to all problems (in those rare circumstances when they even offer a solution) is cruelty to the unfortunate.

Too much street crime? The solution is longer jail sentences (i.e., “tough on crime”) rather than treating the fundamental cause of street crime: Poverty.

Illegal drugs? The GOP solution is harsher drug laws (which are proven not to work) rather than aid for rehabilitation.

Sickness? Take away health care insurance.

Homelessness? Take away financial support.

Poverty? Take away what little the poor have to “incentivize” them to work harder.

Illegal border crossings? Build walls and take children from their parents rather than helping people immigrate legally and integrate with American society. Every day we lose the opportunity for thousands of people to become productive Ameircans, as our ancestors did.

The Republicans have become the party of the rich, the cruel party. Despite all the flag waving, the right-wing has become the antithesis of what America claims to be.

Latent, unAmerican, hate-based cruelty may have begun to flourish with the Tea Party, in 2009, as a reaction to President Barack Obama. Its harsh ideas gradually have grown to full flower under Trump, the exemplar of “me-first, me-only” politics.

 

[No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

The letter Donald Trump may have composed just for me

Here is the text of a letter Donald Trump may have composed just for me.

Dear Rodger,

Many people tell me I love America more than anyone ever has loved America in history, and that is why my billions of patriotic followers believe everything I tell them.

You know we all love America because you’ve seen me hug the flag and you see my followers wave flags.

 

Thank you, God': Trump revels in reign as absolute king of CPAC | Donald  Trump | The Guardian

Cassidy Hutchinson, ignored by all the Trump men at their peril

 

 

 

 

 

 

 

Here’s more proof of my love for America: My followers put flags in their tweets like this:

                                                           StickerTalk USA Flag Vinyl Sticker, 5 inches by 3 inchesStickerTalk USA Flag Vinyl Sticker, 5 inches by 3 inchesStickerTalk USA Flag Vinyl Sticker, 5 inches by 3 inchesStickerTalk USA Flag Vinyl Sticker, 5 inches by 3 inchesStickerTalk USA Flag Vinyl Sticker, 5 inches by 3 inches

They even carried flags into Congress when they tried to overturn the stolen election so there could be a peaceful transfer of power to me. That’s true patriotism, and it’s more than those snowflakes would do.

Here is what one of my writers told me to say about America.

MY ODE TO AMERICA

Hey, if I didn’t love America and all it stands for, I would have created a “Family Separation Policy” to rip immigrant children from their parents permanently and essentially to make them orphans. Some Never-Trumpers say that’s cruel, but I wish someone had taken my kids from me, especially DJTJ, and that other one, Brandon, or something. 

If I didn’t love America, I would have said that a soldier who gives his life for his country is a sucker, and I would have insulted a family whose child died in a war. And, for sure, I would have dodged the draft by concocting a phony story about heel spurs, which were very painful, but due to my superior health, miraculously healed.

And speaking of health, if I didn’t love America I would have told my New York doctor to write that I was in the best health of any American President in history. Make that any American in history.

If I didn’t love America and all it stands for, I would have tried to take health care from the poor by eliminating Obamacare. (Instead, I cut taxes on the rich, who don’t receive enough gratitude from the fake news.)

I would have teargassed protesters to take my picture in front of a church I never would enter, just to show people how religious I am. (So what if I held the bible upside down?)

And if I ever said anything stupid, which I never did, ever, I would have claimed I was joking or being sarcastic. You can say anything that way.

I would have lied about COVID and delayed our response, which would have contributed to the deaths of hundreds of thousands of Americans. (Unfortunately, they mostly were my followers, whom I definitely did not tell not to wear masks.)

I would be supported by nutty white supremacists like the Proud Boys. I would be a huge supporter of Vladimir Putin and Kim Jong Un.

If I didn’t love America and all it stands for, I would have cheated on all three of my wives, while denouncing the marriages of gays. 

If I didn’t love America and all it stands for, I would have said, “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.”

I would have claimed the election was stolen. I would have planned and urged a coup, and sent my naive followers to take over Congress, violently, but I never did, despite what all those RINOs testified.

I would have cheated on my taxes by, for instance, setting up a fake charitable foundation or by rigging the values of my properties.

I would have tried to strongarm state officials into changing votes illegally, so I still could be President.

I would have mimicked and made fun of a man who has a disability.

I would have claimed my inauguration crowd was the biggest ever (which it was).

I would immediately have taken action to stop the perfectly legal armed protests in the halls of Congress, and I would have done nothing to protect Vice President Pence (who is a coward.) I even would have said he deserved to be hung.

I would have lied, endlessly, and if questioned under oath, I would have taken the 5th Amendment, which I said only criminals do. 

If I didn’t love America more than anyone ever has loved anything, I would have claimed Mexico will pay for a wall.

I repeatedly would claim to be the greatest at everything, when in fact, I am the most humble President in history (and the greatest, too.)

Since I didn’t do any of those things, that proves my love for me America. 

Please send me your money so I can fight against everyone I’ve told you to hate.

Sincerely, your leader for life, but only if you send me money or buy my incredibly priced MAGA hats that were not made in China, despite what the label says.

Donald J. Trump

P.S. Send me money. It’s the most patriotic thing to do, and I’ll love you as much as I love America and the Proud Boys..

And there it is, exactly how the Donald may have written it.

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

The good bad news about the Inflation Reduction Act

Now that Senator Sinema has signed on, the Inflation Reduction Act will pass by the scant majority of 51 to 50, including the Vice President’s vote.

Sinema had opposed closing the so-called carried interest tax loophole. Carried interest is treated as a long-term capital gain. Because it’s taxed at a lower rate than ordinary income, private equity, venture capital, and hedge fund operators benefit.

Presumably, she is in bed with those people.

Giving these over-paid number pushers an extra benefit is an anathema to anyone who wants the Gap between the rich and the rest narrowed. So, on that basis, the loophole should be closed.

But it is a federal tax, and federal tax dollars do not fund anything — they are destroyed upon receipt. So whatever reduces federal taxes (i.e., leaves more money in the private sector) benefits the economy.

The dollars you use to pay federal taxes are part of the M2 money supply measure. When those dollars reach the U.S. Treasury, they cease to be part of any money supply measure. Those dollars are destroyed.

When the government spends, it creates new dollars, ad hoc.

Because the Monetarily Sovereign Treasury has the infinite ability to create dollars, there is no answer to the question, “How much money does the Treasury have?” Thus, no measure includes Treasury dollars.

So, there is good and bad in that loophole, but on balance, including the loophole is good because it benefits the entire private sector.

If the Committee for a Responsible Federal Budget’s numbers are correct, and federal deficits are reduced by $305 billion, that would be recessionary.

 

Reducing deficit growth causes recessions (vertical gray bars) which are cured by increased deficit growth.

Even worse than deficit growth reduction is debt reduction. That leads to depressions:

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. A recession began 2001.

The CRFB predicts the federal debt would be reduced by nearly $2 trillion. 

This means the federal government will take $2 trillion from the private sector (aka “the economy”) and destroy those dollars.

The most popular measure of an economy is Gross Domestic Product (GDP). It measures the total spending by the federal government  everyone else in America, plus the net dollars flowing in from across our borders.

Mathematically, for GDP to grow, the private sector must have more dollars. A growing economy requires a growing supply of dollars; when the dollar supply shrinks, GDP shrinks. Simple arithmetic.

When GDP shrinks for two or more months, we call that a “recession,” and if the recession is exceptionally severe, we call it a “depression.”

[Depressions are often defined as recessions lasting longer than three years or resulting in a drop in annual GDP of at least 10 percent.]

The CRFB predicts a depression, though you wouldn’t know it from the tone of their article.

The Congressional Budget Office (CBO) just released its score of the Inflation Reduction Act (IRA) of 2022, legislation which would use Fiscal Year (FY) 2022 reconciliation instructions to raise revenue; lower prescription drug costs; fund new energy, climate, and health care provisions; and reduce the budget deficits.

Mixed bag:

  1. Raising revenue is bad. That means “take more dollars from the private sector.” The federal government neither needs nor uses the dollars, while the private sector does both, need and use.
  2. Lowering prescription drug costs would be good if it meant the government was going to pay. Unfortunately, it means the pharmaceutical companies will pay. Dollars will be shifted around in the private sector, and fewer will be available for research and development.
  3. Fund new energy is good if “new energy” will mean “renewable” and “non-polluting.”
  4. The climate and healthcare provisions seem good, depending on how they are implemented. One good thing, the Affordable Care Act will be strengthened financially.
  5. “Reduce the budget deficits” is bad, bad, bad.

Unfortunately, getting the bill through the reconciliation process was legally and politically necessary. But reducing deficits does not reduce inflation. 

Inflation is caused by shortages of crucial goods and services, most often oil and food. The only part of the Act that comes even close to reducing inflation is the “fund new energy” part, and again, we’ll have to see how that is implemented.

To call the bill the “Inflation Reduction Act” is both humorous and cynical, but that’s government.

Based on the CBO score, the legislation would reduce deficits by $305 billion through 2031 – including over $100 billion of net scoreable savings and another $200 billion of gross revenue from stronger tax compliance.

Again, that’s $305 billion taken from Gross Domestic Product at a time when the economy is in a recession and needs more, not fewer dollars.

Because the prescription drug savings would be larger than new spending, CBO finds the legislation would modestly reduce net spending by almost $15 billion through 2031, including by nearly $40 billion in 2031.

It’s unclear what the above paragraph is saying, but either $15 billion or $40 billion will be taken from pharmaceutical companies, a loss for the economy.

Once fully phased in, the plan would also slightly cut net taxes by about $2 billion per year – with expanded energy and climate tax credits roughly matching the size of new tax increases.

Cutting taxes benefits the private sector.

The legislation would generate nearly $300 billion of net revenue over a decade.

Translation: The legislation would generate nearly $300 billion of net loss for the economy over a decade.

Unlike prior versions of this reconciliation bill, such as the House-passed Build Back Better Act, this legislation would reduce deficits. Along with other elements of the bill, it is likely to reduce inflationary pressures and thus reduce the risk of a possible recession.

The above paragraph is wrong. Reducing deficits does not reduce inflationary pressures, and it absolutely does not reduce the risk of a possible recession.

Federal deficits (blue) do not correspond with inflation (red).

SUMMARY Inflation, i.e., a general price increase, is caused by shortages, not federal deficit spending.

Federal deficit spending can cure inflation when the spending helps cure the shortages. Example: Deficit spending to fund more oil/gas production.

Deficit reductions mathematically lead to GDP reductions by taking dollars from the private sector.

The Inflation Reduction Act will do many things, some good and some bad, but it will not reduce inflation.

——-//——-

[No rational person would take dollars from the economy and give them to a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

……………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

A tale of two leaders: Powell vs. Biden

Fed Chairman Jerome Powell and President Joe Biden both wish to reduce inflation, prevent (or cure) a recession, and grow the economy.

Both receive the advice of top, uh, well-paid economists. Yet both favor precisely the opposite policies.

See the source image
Powell admitted he doesn’t have the right tool but insists on continuing with the wrong tool.

Powell recently said, “I do not think the U.S. is currently in a recession, and the reason is there are too many areas of the economy that are performing too well. This is a very strong labor market … it doesn’t make sense that the economy would be in a recession with this kind of thing happening.”

Translation: He doesn’t understand what’s happening but denies it’s a recession.

Yet he raised interest rates by 0.75 percentage points for a second consecutive time to “cool” the economy.

By “cool,” he means the economy is growing too fast, which causes inflation.

He wishes to slow economic growth, which in his opinion, will cure inflation but not cause the recession he denies already is happening. Apparently, Powell thinks the opposite of “inflation” is “recession.” But the two can occur together in what’s called “stagflation.”

Prices are a function of supply and demand. Inflation occurs when there is an imbalance: Too little supply to meet the demand. Today’s inflation, and indeed all inflations through history, are not caused by demand growth but by supply shrinkage.

Historically, demand increases are not sudden, but supply decreases can come overnight. So markets can adjust to the former but struggle to adapt to the latter.

Today, we have the confluence of many shortages: Oil (energy), food, transportation, computer chips, autos, lumber, appliances, homes, labor, and many items related to the basic shortages. In terms of inflation, the single most crucial shortage is the oil (energy) shortage.

Since the cause of inflation is shortages, curing inflation requires curing shortages.

But Powell’s interest rate increases do not address shortages. They do not increase supply. Interest rate increases reduce both supply and demand. They reduce supply by making borrowing by manufacturers more expensive. They reduce demand by making borrowing by consumers more expensive.

Powell hopes that his rate increases will cut demand more than supply. He has no way to know or control whether this will happen. It’s just a hope.

But Jerome, be careful what you hope for; cutting demand impoverishes the supplier section, which leads to a recession.

To quote the Wall Street Journal:

Inflation is a global phenomenon inflicting significant financial pain on families everywhere. Rising costs are an urgent problem, and interest rates play a key role in maintaining price stability.

But urgency is no excuse for doubling down on a dangerous treatment.

As with any illness, the right medicine starts with the right diagnosis.

Unfortunately, the Fed has seized on aggressive rate hikes—a big dose of the only medicine at its disposal—even though they are largely ineffectiveagainst many of the underlying causes of this inflationary spike.

It’s a global problem, as is COVID, but the U.S. can solve this problem within our borders if we use the correct solutions.

As we often have said, the Fed has been tasked with a problem for which it has no tools — shortages of crucial goods and services. Only Congress and the President have the tools to cure shortages.

Mr. Powell has acknowledged this. He noted that elevated interest rates likely wouldn’t bring down gasoline or food prices. “There are many things we can’t affect,” he admitted —namely, the key causes of today’s inflation.

This is a monumental admission. The man tasked with curing inflation has admitted he doesn’t have the tool to do the job. Still, he persists in using that one tool that will lead to recession.

Higher interest rates won’t end skyrocketing energy prices caused by Vladimir Putin’s war on Ukraine. They won’t fix supply chains still reeling from the pandemic.

And they won’t break up the corporate monopolies that Mr. Powell admitted in January could be “raising prices because they can.”

If the Fed’s interest-rate hikes won’t address many causes of today’s inflation, it’s worth asking: What would they do?

When the Fed raises interest rates, increasing the cost of borrowing money, it becomes more expensive for businesses to invest in their operations.

As a result, employers will slow hiring, cut hours and fire workers, leaving families with less money. In the bloodless language of economists, that’s referred to as “dampening demand.”

It also is referred to as “causing a recession.”

But make no mistake: If the Fed cuts too much or too abruptly, the resulting recession will leave millions of people—disproportionately lower-wage workers and workers of color—with smaller paychecks or no paycheck at all.

But that is the whole plan. Make lower-wage workers and workers of color pay to stop inflation. The general sends the poor to the front, not caring how many die.

Mr. Powell has even conceded that the Fed’s actions may lead to a downturn, saying recession “is not our intended outcome at all, but it’s certainly a possibility.”

If all you have is a hammer, every problem looks like a nail. Who cares whether it works or not?

Despite these warnings, the Fed chairman still has cheerleaders for his rate-hiking approach. Chief among them is Larry Summers. “We need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” the former Treasury secretary recently told the London School of Economics.

You read that correctly: 10% unemployment. This is the comment of someone who has never worried about where his next paycheck will come from.

What can I say about Larry Summers that I haven’t said here, here, here, here, here, and here? The man has my admiration for his ability to fail into better jobs repeatedly.

Summers is a magical example of the Peter Principle: Being promoted to his level of incompetency is his sole success. What next, Larry? Kill the elderly to cut Social Security costs?

If Messrs. Powell and Summers have their way, the resulting recession will be brutal.

As in past downturns, Republicans in Congress will press for austerity—tax cuts for giant corporations and the rich, weaker regulation on big businesses, and little economic support for the most vulnerable.

Democrats should be ready to reject the Republican playbook and prepared to help working families survive.

Well, maybe, just maybe, the Dems are listening, especially if  Sen. Joe Manchin remembers he’s a Democrat.

From Axios:

One big thing: Biden success story

Nine Ways Biden's $2 Trillion Plan Will Tackle Climate Change - Inside Climate News
Playing the long game. Winning despite all odds.

President Biden has slowly but substantially re-engineered significant parts of the American economy — achievements obscured by COVID, inflation and broad disenchantment. e domestic semiconductor industry, and accelerated U.S. viral research and vaccine production capabilities.

    • He might be on the cusp of the biggest domestic clean-energy plan in U.S. history. 

Interestingly, it all has an America First twistdrilling more oil here … fixing infrastructure here … moving chip-making here … increasing manufacturing jobs here … creating vaccines here.

    • The $280 billion CHIPS and Science Act provides grants, tax credits and other incentives to manufacture computer chips in the U.S. The White House says it’ll eventually lower the price of cars, dishwashers and computers.
    • Biden could get another huge win with the climate plan secretly negotiated by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin. The package would provide new tax credits for buying EVs — plus rebates for buying efficient appliances and weatherizing homes, and tax credits for heat pumps and rooftop solar panels.
    • Biden’s $1 trillion infrastructure bill to rebuild roads, bridges and rail is one of the biggest packages signed by a president ever.
    • The Biden administration said it’ll pour $3 billion into the vaccine supply chain, creating thousands of U.S. jobs, and helping prepare for future threats.
    • Electric-vehicle manufacturing is growing in the U.S., with GM and Ford announcing plans for massive vehicle and battery plants across the Midwest and Appalachia. Fun fact: GM’s Mary Barra, who also chairs the Business Roundtable, is the CEO this White House has hosted most often.

These developments required bipartisanship (remember that?) — something Biden promised but gets little credit for, since these thin bands of Republican support look nothing like traditional bipartisanship.

Not only did Biden land these economic measures and a gun-control bill, but same-sex marriage protection is getting close — baby steps, but in a once unthinkable direction.

Biden has only a bare 50-50 Senate “majority” (depending on Sens. Manchin and Sinema). Even then, he is limited by reconciliation to avoid a purely political GOP. It has no ideas for anything but will filibuster everything the Dems submit.

Somehow, Biden managed to accomplish far more than Trump ever dreamed of. This is partly because Trump is an incompetent, corrupt psychopath, who cares only about himself, and the GOP is a crooked election machine.

But much credit belongs to “weak, timid” Biden, who plays the long game, insults no one, closes no doors, knows how to negotiate, and doesn’t whine about everyone else being at fault.

Whereas Trump split his time evenly among golf, tweeting insults, and self-aggrandizement, Biden moved slowly, quietly, but surely to accomplish, accomplish, accomplish.

Now, if only Powell would stand up and say, “I don’t have the right tool. Interest rates won’t cure shortages. Congress must pass spending bills to end key scarcities. That would end inflation and enrich the economy. And the people would thrive.”

That bit of honesty would send more shock waves through Congress than the attempted coup did.

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps: Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY